Our stay-put behavior reflects our view that the stock market serves as a relocation center at which money is moved from the active to the patient.
Interpretation
The quote suggests that investing in the stock market rewards those who are patient over those who are constantly trading.
Warren Buffett's quote emphasizes the belief that the stock market functions as a mechanism where wealth is redistributed from those who are impatient and frequently buy and sell their investments, to those who adopt a long-term perspective and hold onto their investments patiently. It suggests that those who remain steadfast and avoid impulsive decisions typically achieve better financial outcomes over time.
In practice
During a finance seminar to illustrate long-term investing principles.
I have no views as to where it will be, but the one thing I can tell you is it won't do anything between now and then except look at you. Whereas, you know, Coca-Cola (KO) will be making money, and I think Wells Fargo (WFC) will be making a lot of money and there will be a lot - and it's a lot - it's a lot better to have a goose that keeps laying eggs than a goose that just sits there and eats insurance and storage and a few things like that.
If the world couldn't see your results, would you rather be thought of as the world's greatest investor but in reality have the world's worst record? Or be thought of as the world's worst investor when you were actually the best?
Cash never makes us happy, but it's better to have the money burning a hole in Berkshire's pocket than resting comfortably in someone else's.
I think you should read everything you can. In my case, by the age of 10, I'd read every book in the Omaha public library about investing, some twice. _x000D_ You need to fill your mind with various competing thoughts and decide which make sense.
The most common cause of low prices is pessimism - some times pervasive, some times specific to a company or industry. We want to do business in such an environment, not because we like pessimism but because we like the prices it produces. It's optimism that is the enemy of the rational buyer.
One’s objective should be to get it right, get it quick, get it out and get it over. Your problem won’t improve with age.
The grim irony of investing is that we investors as a group not only don't get what we pay for, we get precisely what we don't pay for.
Don’t buy luxuries until you’ve built the assets to afford them
I'm not emotional about investments. Investing is something where you have to be purely rational and not let emotion affect your decision making - just the facts.
Everyone recognizes that's a joke because obviously the number and shape of the pieces doesn't affect the size of the pizza. And similarly, the stocks, bonds, warrants, etc., issued don't affect the aggregate value of the firm.
There is a burden of care in getting riches; fear in keeping them; temptation in using them; guilt in abusing them; sorrow in losing them; and a burden of account at last to be given concerning them.
Liquidity is a good proxy for relative net worth. You can't lie about cash, stocks, and bond values.
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